Electronics MSMEs to get lift from PLI push, high demand: SME Tracker

Mobile phones, consumer electronics and industrial electronics together account for 55-60% of electronics sales in India

The growth of electronics consumption in India is projected to moderate to 8-10 per cent on-year in fiscal 2027, from 10 per cent in fiscal 2026, on account of supply-chain disruptions and elevated component costs amid the conflict in West Asia.

 

The moderation would be despite some support from benign inflation, affordable-financing options, rising consumer aspirations and increasing industrial demand for electronic components.

 

Mobile phones, consumer electronics and industrial electronics together account for 55-60 per cent  of electronics sales in India.

 

In fiscal 2026, electronics consumption was around ₹17 trillion, driven by government initiatives to boost demand and broader policy moves such as rationalisation of the goods and services tax rates and revision of income tax slabs.

 

In fiscal 2027, electronics production is expected to increase 10-20 per cent  on-year in fiscal 2027 on the back of the Production Linked Incentive scheme. Policy measures such as higher domestic content requirements, mandatory Bureau of Indian Standards certification for resale of imported electronic products and supportive taxation policies will strengthen domestic manufacturing. 

 

The Electronics Component Manufacturing Scheme, which seeks to attract investments from global and domestic players, has received strong traction. Investment proposals worth ₹1.15 trillion have been received, nearly double the initial target of ₹593.5 billion, prompting the government to raise the scheme's outlay to ₹400 billion in the Union Budget 2026-27.

 

Moreover, 10 semicon-ductor plants have been approved under the India Semiconductor Mission, with cumulative invest-ments of over ₹1.60 trillion across six states.

 

These developments bode well for the micro, small and medium enterp-rises (MSMEs) that account for 25-35 per cent of the elect-ronics industry. These units are engaged in electronic component manufacturing and assembly of consumer and industrial electronic products.

 

In line with industry trend, however, these MSMEs are expected to see their revenue growth moderate 100-200 basis points on-year to 7-9 per cent. 

 

The earnings before interest, taxes, depreciation and amortisation margin of these MSMEs is also expected to decline 50-100 basis points to 6-8 per cent  in fiscal 2027. 

 

While higher volumes will provide some support, it will be offset by rupee depreciation and rising import costs as the uncertainties in West Asia continue to disrupt global supply chains and push up the prices of components.